Slowing Tokyo inflation temporarily supports BOJ’s price view

TOKYO, May 26 (Reuters) – Inflation slowed in Tokyo, Japan, supporting the Bank of Japan‘s view that prices are likely to moderate toward autumn, although high prices are likely to continue to weigh on household spending. Prices for consumer goods excluding fresh food rose 3.2 percent in May, a slowdown from the previous month and below the 3.4 percent forecast by economists. However, there are also signs that deeper inflation trends may continue to strengthen. The deceleration in inflation largely reflected lower electricity and natural gas prices in Japan. The latest data showed inflation remained above the Bank of Japan’s 2 percent price target. Economists said: “Looking forward, higher electricity prices will push headline inflation higher in June, which will likely be offset by base effects in July, keeping inflation in check. We expect core inflation to decelerate in the fourth quarter of 2023.” to less than 2%.”